New Delhi: In 1998, about a year after Kotak Mahindra Group banker Uday Kotak bought the Business Standard newspaper from the Anand Bazar Patrika Group, The Great Eastern Shipping Co. Ltd invested Rs25 crore for a 33% stake. On 9 July, a decade after the initial investment, GE Shipping exited Business Standard Ltd (BS). Since 2004, when Pearson Plc. picked up a 14% stake in BS Ltd, India’s largest private sector shipping firm had held a 28% stake in the newspaper publisher.
On Saturday, the Business Standard had a one-paragraph item on its front page noting the Great Eastern divestment.
Self-sufficient: GE Shipping MD Ravi K. Sheth. The firm pulled out its investment in Business Standard. (Photograph by Abhijit Bhatlekar/Mint)
Over the weekend, GE Shipping managing director Ravi K. Sheth spoke in a telephone interview with Mint about the investment and the reasons for exiting. Edited excerpts:
You have stayed put with your investment in BS for 10 years. Why quit now?
The investment in BS was an insignificant part of our balance sheet. As you may be aware, BS is now investing in Hindi and Gujarati editions and is in a growth stage. They naturally needed more investments.
At some point, our board felt that media was not really our core business. Two years ago, we made significant investments in offshore oil services and the board felt we should be focusing harder on our core businesses and didn’t have management time and attention to spare.
Also, apart from the two board seats we had, we never played an active role in running the paper.
It has a great editor and strategic brain in the form of T.N. Ninan and the paper pretty much runs itself.
Did the fact that you did not have a role in running the paper contribute to the decision to exit?
No, it’s not that. We had the same role as any other minority shareholder—that of contributing to and approving the business plan. You must also remember that we share an excellent relationship with the Kotak Group. They never behaved like a dominant shareholder.
Was this a good investment for GE Shipping? What kind of return did you get on your investment?
Well, we had an excellent relationship with the Kotak Group and Ninan.
We worked very well together as partners. Our association with BS has actually been a learning experience. It has been a long and satisfactory partnership. I would say we got a decent return on our investment.
I don’t want to compare it with other investment opportunities that existed in 1998. Yes, maybe we would have made more money if we had invested in a sector like IT (information technology). But, that’s all right.
As someone who has known that paper closely for long, do you think it now needs a foreign partner? (BS recently ended its financial partnership with Pearson. The content sharing arrangement it had with Pearson-owned Financial Times also appears to have ended.)
Well, the paper is now in the hands of the Kotak Group and it’s for them and Ninan to decide about all that.
Are you now not as bullish about the media sector as you were in 1998? Or will you look at other potential media investments?
No, we won’t. Our own business gives us sufficient opportunities. We don’t need to look out.